Several new tax time-related changes have happened since last year. Here are just five of them to be aware of.
- First home super saver scheme
The first home super saver (FHSS) scheme allows you to save money for your first home inside your superannuation fund.
From 1 July 2017, you can make voluntary concessional (before-tax) and non-concessional (after-tax) contributions into your super fund to save for your first home.
From 1 July 2018, you can then apply to withdraw your voluntary contributions to help you purchase your first home.
Note! You can only request a release of amounts under the FHSS if you are:
- 18 years old or older;
- never owned property in Australia; and
- have not previously requested the ATO to issue a FHSS release authority in relation to the scheme.
- Personal income tax plan
From 1 July 2018:
- The top threshold for the 32.5% bracket has increased from $87,000 to $90,000.
This will reduce the amount of tax withheld from your pay.
- A new low and middle-income tax offset is available to individuals with a taxable income less than $125,334.
This offset won’t reduce the amount of tax withheld from your pay – it will be a one-off amount applied to your Notice of Assessment to reduce the overall amount of tax you have to pay.
If you are involved in acquiring or disposing of cryptocurrency, you need to be aware of the tax consequences. These vary depending on the nature of your circumstances.
Usually, a CGT event occurs when you dispose of your cryptocurrency. If you make a capital gain when you dispose of your cryptocurrency, some or all of the gain might be taxable.
Cryptocurrency as an investment: If you held cryptocurrency as an investment, any capital gain you make would usually be taxable.
Cryptocurrency as a personal use asset: Personal use of cryptocurrency is not subject to income tax or GST in Australia. Cryptocurrency may be a personal use asset if it is acquired and kept or used mainly to purchase items for personal use or consumption. In this case, any gain you make on disposing of cryptocurrency that is a personal use asset would usually be disregarded for tax purposes.
Cryptocurrency in a business: If you carry on a business that involves transacting in cryptocurrency, the trading stock rules rather than the CGT rules may apply. In this instance, gains made on disposing of cryptocurrency would be ordinary income rather than a capital gain. However, you would first need to check whether you are carrying on business and that you are holding the cryptocurrency for sale or exchange in the ordinary course of your business before the trading stock rules will apply.
Note! The tax treatment of the gains or losses you make from disposing cryptocurrency will depend on the circumstances in which you are holding it. Your tax adviser will be able to assist you to work out the correct tax treatment of your gains and losses.
- Everybody involved in acquiring or disposing of cryptocurrency needs to keep records in relation to their cryptocurrency transactions.
- If you have dealt with a foreign exchange and/or cryptocurrency there may also be tax consequences for your transactions in the foreign country.
- Tax deductions for personal super contributions
Eligibility rules for claiming a deduction for personal super contributions have changed.
From 1 July 2017, most taxpayers under 75 years old (including those aged 65 to 74 who meet the work test) are able to claim a deduction for personal super contributions regardless of their employment arrangement.
- Super contributions – changes to tax offset for spouse contributions
From 1 July 2017, the spouse income threshold increased from $10,800 to $37,000. This means that more people are eligible to claim the tax offset for the 2017-18 and future financial years.
You can claim the maximum tax offset of $540 if:
- you contribute to the eligible super fund of your spouse, whether married or de-facto, and
- your spouse’s income is $37,000 or less.
The tax offset amount will gradually reduce for income above this amount and completely phases out when your spouse’s income reaches $40,000.
You will not be entitled to the tax offset when your spouse receiving the contribution:
- exceeds their non-concessional contributions cap for the relevant year, or
- has a total superannuation balance equal to or exceeding the general transfer balance cap ($1.6 million for 2017-18) immediately before the start of the financial year in which the contribution was made.
Read our complete September 2018 Taxwise Individual Newsletter here